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Overview of Direct Selling Industry and Experience of Self-Regulation

Overview of Direct Selling Industry and Experience of Self-Regulation. Presented By Tamuna Gabilaia WFDSA Director Korea Asia Pacific Economic Cooperation Consumer Education and Protection Initiative Seoul, Korea December 15, 2005 . World Federation of Direct Selling Associations.

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Overview of Direct Selling Industry and Experience of Self-Regulation

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  1. Overview of Direct Selling Industry and Experience of Self-Regulation Presented By Tamuna Gabilaia WFDSA Director Korea Asia Pacific Economic Cooperation Consumer Education and Protection Initiative Seoul, Korea December 15, 2005

  2. World Federation of Direct Selling Associations • Founded in 1978; voluntary, non-governmental organization • 62 National DSAs Around the World • Governing Mechanism: CEO Council • Federation of European Direct Selling Associations (FEDSA) Affiliated • Doing Business in 170-plus Countries

  3. WFDSA Mission To build understanding and support for direct selling worldwide. The association supports direct selling companies and associations by: • Developing, maintaining and promoting the highest global standards for responsible and ethical conduct. • Advocating the industry's positions and interest with governments, media and key influencers. • Serving as a trusted global resource for information on direct selling. • Facilitating interaction among direct selling executives on issues of importance to the industry.

  4. Estimated Global Retail Sales 1995-2004 In Billions of US Dollars

  5. Estimated Global Salesforce 1996-2004 In Millions

  6. Largest Direct Selling Markets(2004 figures) • Country Sales • United States $29.9 • Japan $27.0 • South Korea $8.0 • Brazil $3.9 • Mexico $3,3 • UK $3.0 • Italy $3.0 • Germany $2.9 • France $1.7 • Taiwan $1.6 • Russia $1.3 • Malaysia $1.3 • Australia $1.1 • Canada $1.0

  7. Largest Markets by Salesforce Size(2004 figures) • Country Salesforce • United States 13.6 • Indonesia 5.4 • South Korea 4.7 • Thailand 4.1 • Malaysia 4.0 • Taiwan 3.8 • Russia 2.3 • Japan 2.0 • Philippines 2.0 • Mexico 1.9 • Brazil 1.5

  8. Benefits/traditions of Direct Selling • Low-cost, low risk personal business opportunity • Flexible work schedule • Good way to meet and socialize with people • Earnings in proportion to one’s efforts • New products and competition • Capital Investment • Business skills and confidence • Support to the service economy • Creation of direct and indirect jobs

  9. WFDSA Socio-Economic Impact Studies • Ernst and Young Partner • In 2004-2005 Studies Conducted in Brazil, Korea, Japan, Mexico, Taiwan, Russia, Canada, US. • In 1999 Studies Conducted in France, Germany, Italy, Spain Sweden and the United Kingdom. • 14 Markets = 88% of Global Sales

  10. Self-Regulation • Self-Regulation = combination of private interests with government oversight • Form of a voluntary self-restraint for developing win-win relationships • World Codes of Conduct for direct selling • Codes towards consumers and Codes towards direct sellers • Extraterritorial provision of the Codes

  11. Pyramid Schemes Defined • A Pyramid Scheme is “a scheme for the distribution of products, services or money, whereby a person gives consideration (payment) for the opportunity to receive compensation based primarily on the introduction of additional participants into the scheme, rather than from the sale of products to consumers.” Pyramid Schemes are Frauds!

  12. Pyramid Schemes: A Quick Test • Ask two questions • Do you risk substantial financial loss by joining the company? If Yes – Be Careful! 2. Is the money you will earn primarily coming from the sale of the product or service to the ultimate consumer of that product or service? If No – Stay Away! Investigate Carefully!

  13. Self-Regulation • Pyramid schemes • Cooling-off period • Inventory loading • Fees • Exaggerated earnings claims • Identification • Privacy • Misrepresentation/Claims

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